Okay, good morning. Welcome to our day two of the Cantor Healthcare Conference. My name is Li Watsek , a Biotech Analyst at Cantor. It is my great pleasure to be hosting our next company, Arcus. With me today is CFO Bob and Pia, head of IR. Bob, I would love to maybe hand it over to you to walk us through what the story is today.
Great. Thanks very much, Li. Thanks very much for having us. Arcus is a company very focused on high-quality drug discovery, in particular with a focus on small molecules. What we really like to do is leverage that expertise where we see targets that have strong biologic validation, where we think a very high-quality molecule can make a big difference. Our lead program is casdatifan, which is being developed for the treatment of clear cell renal cell carcinoma and kidney cancer. We have a very broad development program there, and it has probably garnered by far the most investor interest. We do have a broad pipeline behind it. Notably, actually, we have a late-stage pancreatic cancer trial that will have an interim analysis. So this is frontline PDAC in the fourth quarter of this year. We are very excited about that. That is a CD73 inhibitor.
The value proposition there is in the context of immunogenic chemotherapy, essentially enabling the immune system to contribute to the response to the cancer. In addition to that, we have a fairly broad early-stage immunology portfolio exploring a number of different inflammatory conditions. But I am sure today we will talk mostly about casdatifan, which certainly has garnered most of the investor attention.
Yeah, a lot to look forward to. Let us get into the October event update first. Just at a high level, what would be the key takeaways that you want investors to walk away with casdatifan?
Sure. The key takeaway that we'd like to see from the event is that we think that there's the potential for broad utilization of casdatifan in every line of treatment for metastatic clear cell RCC. That's what our development program is geared towards. At a very high level at the event, which will be October 20th here in New York, we'll be sharing data from late line monotherapy.
As well as second line, in combination with cabozantinib, and then also some frontline data. In the frontline, our strategy is going to be to combine casdatifan with ipi/nivo, which is a regimen that has roughly a 30% share in the frontline market today. We have a pretty holistic development strategy really for each line of therapy for patients, and the event I think will provide windows into each of those settings and allow investors to assess important attributes of the molecule, and efficacy across a range of settings and combinations.
Maybe start with the second line cas plus cabo update. I think that's one focus for investors, just given the way through to your ongoing phase III PEAK-1. You also mentioned that you hope that you would demonstrate just from a PFS hazard ratio perspective, casdatifan will be better than belzutifan. So we're talking about the LITESPARK-011 study.
Yep.
So in that study, we are looking at hazard ratio of 0.7. So question number one, what is a better hazard ratio? Should we assume maybe 0.6 or even lower? And the second question is, when we look at the benchmark studies out there, right?
We perhaps have three. Are you implying the hazard ratio would be better when you compare to all three
Yeah
benchmark studies?
Yeah, I think it's hard to be quantitative in terms of it because the data that we'll be sharing will be single-arm data. When we think about the concept of hazard ratio, and it's really the concept that we're talking about, when we think about the concept of hazard ratio, we're thinking about the obvious cross-trial comparisons that people will make relative to the patient populations.
There are different prognostics for patients in the second-line therapy for kidney cancer depending on what treatment that they received previously. In LITESPARK-011, the prior treatments were quite a bit different than the patient population that we're going to be looking at. When we talk about developing confidence or engendering confidence for investors in our ability to have a better hazard ratio than LITESPARK-011.
I think what we're thinking about is a comparison to the relevant benchmarks for each of the patient populations and feeling strong that our performance is at or better than what belzutifan has demonstrated, so that in the aggregate it would be better. I think it's probably premature to start talking about quantifying the difference from a hazard ratio benefit perspective. I should say, too, the one thing that's important to underscore is that while we do think we will have a better hazard ratio than LITESPARK-011, one of the fundamental decisions we made early on in our trial structure was the combination agent. We're combining with cabozantinib, which is clearly the preferred agent and had a 40% market share before any adoption of a HIF-2α inhibitor in the second line. It was the lion's share of second-line markets.
Physicians are very comfortable with cabozantinib and prefer using that drug in that setting. We've combined with that. The Merck combination includes lenvatinib. I think that the first point of differentiation in our combo is the combination partner.
I would also add that we also have an opportunity to show OS benefit. We will show an early OS curve for the cas-cabo cohort, and we can get into the late-line data as well. We will show an early OS curve for the cas-cabo cohort. We, unlike belzutifan, actually do have an opportunity to show OS, which would completely change the game in terms of differentiation.
I think, Bob, you made a great point. As we do this cross-trial comparison, I think we need to look at the patient population.
Yes.
I think in your ARC-20 study, when we compare to LITESPARK-011, I think one important nuance here is you guys allow prior lenvatinib exposure. Can you just talk to us about how that might impact the later line, maybe cabozantinib performance, but also casdatifan performance?
Yeah. Sure. Absolutely. We feel like the ARC-20 cohort that we enrolled is probably closer to representing a real-world patient population versus the LITESPARK-011 study. LITESPARK-011, as a quick reminder, was belzutifan, Merck's HIF-2α inhibitor, plus lenvatinib, their VEGF TKI, versus cabozantinib, which is a standard of care in the second line. As a result, they had to preclude patients that were treated in the front line with both lenvatinib and cabozantinib. In the aggregate, that's 40%-50% of the front-line market that are essentially being excluded from enrollment in LITESPARK-011. In addition to that, they actually enrolled quite a number of patients. Over a quarter of their patients were what I'd call first-generation TKI-treated patients with sunitinib and pazopanib, which aren't used nearly as much anymore in the U.S. That patient population wasn't a particularly real-world patient population.
We know from a couple of smaller studies that were done by high-quality academic institutions that patients that were previously treated with lenvatinib do particularly poorly when they are treated subsequently with cabozantinib. Median progression-free survival of about four to six months, whereas you would probably expect closer to nine months plus from that patient population. Particularly poor prognostic there. In aggregate, I think our patient population is a lot closer to what we would expect from a real-world patient population.
The one other thing that I would just note is, and this is an important nuance, Merck has shared data, at least in late-line monotherapy, where they've shown how their drug belzutifan performs dependent on how many prior lines of TKI treatment you've received. Their efficacy deteriorates the more TKI usage a patient has seen. We've commented that we don't see that deterioration in efficacy with our drug. While you absolutely would expect with our patient population that monotherapy cabozantinib would do worse in the aggregate in the second-line study, we would expect our control arm in our pivotal study, PEAK-1, likely would perform worse as a result.
We're optimistic that we think that there's an opportunity for casdatifan to address those underserved patients because we have a much more hard-hitting HIF-2α inhibitor that has the potential to address elevated HIF-2α levels from prior TKI treatment, whereas belzutifan, since it has a limitation, probably doesn't have that same ability based on the data that they've shared so far.
Yeah. That's such an interesting point. Bob, you said you guys have not observed differential response based on prior TKIs. Is that based on your late-line monotherapy?
It's late-line monotherapy data, where you can look at whether patients received one, two, or three prior lines of TKI. Merck shared data that PFS curves, essentially Kaplan-Meier curves written out response rate data, but PFS curves that show a significant deterioration depending on how many prior TKIs a patient has seen. Our comment is that we don't see meaningful differentiation in efficacy, whether a patient's seen one, two, or three prior lines of TKI if treated with casdatifan.
Mm-hmm. Pia, you mentioned you guys also going to be sharing the OS curve, and seems like you guys think there's a possibility you might be able to show a survival benefit. Now, it's single arm study, how confident do you think, once you share the data, and I believe you're also going to get some OS data from the late-line- monotherapy as well, that you can put the pieces together to support, okay, maybe the phase III PEAK-1, we have a pretty good shot at OS.
Yeah.
For the cas-cabo data, we'll have about 20 months median follow-up. In the late line, we'll actually have 28 months median follow-up, so that's quite a long time. The comp there would be LITESPARK-005, where it was actually a later line population relative to our study. But the OS there was 21.4 months. So we should be able to see something with almost 30 months of follow-up in the late line. Then with LITESPARK-011, they showed a slight benefit in OS 0.85 hazard ratio, but it was not stat sig. It doesn't take too much of a leap of faith to sort of see an early OS curve with our cas-cabo data and derive the potential for an OS benefit there.
I think it's important to say that the late-line monotherapy provides a very clean look at what we're seeing in terms of overall survival from casdatifan alone. Just reminding folks, we saw progression-free survival there of 12-15 months versus the benchmark from belzutifan at 5.6 months. So, we're cautiously optimistic on the OS front for casdatifan there. As Pia pointed out, we think that there's every reason to believe that that could read through to the second line and the first line.
Mm-hmm. Then maybe moving on to the frontline data which I think is going to be a very important piece-
Yep
supporting the peak sales potential for casdatifan. Here, we will be looking at doublet and triplet regimens. You guys have already disclosed maybe for the doublet, which is cas plus zim, so that is
Yeah
[dual on] PD-1. You are already seeing pretty low primary progression rate
Yeah
like 7%. That compares really, really favorably to ipi/nivo.
Yep.
You guys are also going to be sharing PFS data. Tell us about what the expectation should be, what is the right metrics that we should compare that to?
Sure. Absolutely. We have a cohort, as you highlighted, that is casdatifan plus anti-PD-1 that will have 11 months of median follow-up. We will share a Kaplan-Meier curve, we will share response rates. The rate of primary progression, as you mentioned, is already known. It was 7% compared to 18% for CheckMate 214 for the ipi/nivo regimen. Ipi/nivo, as I mentioned earlier, has 30% of the frontline market share, despite the fact that its progression-free survival is probably the weakest metric amongst the approved modern-day regimens. The TKI-containing regimens have median PFS of 16-24 months, whereas ipi/nivo is 12 months. The main reason for its large market share in the frontline is actually the overall survival benefit that it brings.
I think when we have spoken to physicians before, they really want to give every patient the chance for the best long-term survival, and ipi/nivo provides that. However, there is a significant portion of patients that do not respond, so we talked about the median PFS is 12 months there. So half of patients are progressing within their first 12 months of therapy, and obviously 18% at their first scan.
There is a real need to improve that regimen with disease control, and we think that is absolutely a place where casdatifan can bring value. Because a lot of that value proposition is in the early parts of therapy and disease control, the early data will be really important. So looking at the first 12-month Kaplan-Meier curve, we think you will be able to tell a lot about what casdatifan is bringing in terms of efficacy compared to benchmarks for immunotherapy treatments. The two benchmarks there are, as I mentioned, CheckMate 214, which was the ipi/nivo pivotal study where roughly half of patients progress within the first year. There is also a benchmark for anti-PD-1 monotherapy with KEYNOTE-427, which shows that progression-free survival with just an anti-PD-1 alone is about seven months.
Clearly, ipi/nivo is better than anti-PD-1, and we will be able to compare it to both of those. We think if you are starting to see a noticeable difference versus both of those regimens, potentially, that that would bode very well for the frontline opportunity because I think it would be a powerful regimen for patients.
Then for the triplet cohort, I understand the follow-up is shorter
Yes
for these patients. I assume the primary focus there would be, I guess, the rate of primary progression and then tolerability.
Yeah, absolutely.
What would be a good outcome?
Yeah. We absolutely will be looking at rate of primary progression, and obviously we want to see something better again than what we saw with ipi/nivo in CheckMate 214, the 18% rate. In terms of tolerability, our expectation and what we believe success would look like is essentially the tolerability profile from ipi/nivo along with the tolerability profile from casdatifan. There is not a lot of overlapping toxicity between those regimens, so we think that they would combine well and that that would certainly be a better, more patient-friendly regimen than anti-PD-1 plus TKI.
Importantly, we will have about 20 patients who have had the opportunity to receive all four cycles of ipi, so 12 weeks of follow-up, which should be sufficient to support the start of our phase III trial in that setting, which would be by the end of the year.
Yeah.
Okay. Sounds like just putting the doublet and triplet data together, we should be able to have a pretty good sense in terms of your first phase III frontline trial.
Yeah
what that's going to look like.
Yeah.
Particularly from a PFS
Yeah
perspective, right?
Yeah, and I think that's really important because if you think about where we were a year ago when we shared the data that was the first early look of our casdatifan plus cabozantinib combination, along with our more mature late line monotherapy data.
that's really what took us to be a $3.5 billion to $4 billion company. The commercial opportunity in the second line is, we believe about $1.5 billion to $2 billion. The commercial opportunity in the front line, we believe is $4 billion plus. We like to see that this is the first chance to really engender confidence in the investor community and the potential for that frontline therapy which we think is a huge opportunity.
Mm-hmm. Merck will share their frontline phase III study at ESMO. I know you guys said you don't think there's much read-through. On the other hand, you guys are also trying to do some TKI combinations.
I just wonder, what can you learn from the LITESPARK-012 data set, just to the degree that you're also doing a TKI combination. If it turns out it's a clear miss which I don't believe it will be, but let's just assume it turns out to be a clear miss situation, what gives you the confidence that casdatifan plus a TKI regimen would turn out to be perhaps different?
Yeah. As we talked about before with the ipi/nivo regimen, that is what we've described as our brass ring in the front line. That is our primary focus, is delivering on that. We do believe that there is a portion of physicians that will continue to want to reach for a TKI, especially for certain patients that may have more aggressive or bulkier disease. We think exploring TKI combo makes a lot of sense. We think there's two really important pieces as you think about a frontline combination that utilizes a TKI. Number one is the combination partner, and number two is, and probably even more importantly, is what your agent is doing. I know we haven't talked about it much today, but those that have followed us for a while are very familiar with the advantages that casdatifan has at a molecular level versus belzutifan.
Belzutifan has absorption-limited pharmacokinetics, which essentially limits their maximum dose in terms of how much efficacy they can get from their drug. We believe we're hitting the target essentially 5x harder. With belzutifan, you see a loss of pharmacodynamic effect relatively quickly. When you're going to the frontline setting and trying to build on a regimen that already has 24 months of progression-free survival, we think it's pretty tough to do that when you don't have a drug that's perhaps sufficiently covering the target for the entire duration of that therapy. We think casdatifan clearly has the molecular properties to do that. Further, Merck selected, obviously, their regimen in part because they commercially own lenvatinib.
It's our belief that if you're going to utilize a TKI in the front line in combination with a HIF-2 inhibitor, it may make sense to utilize a more selective and perhaps a more patient-friendly TKI, and that's why we're going to be running a cohort in ARC-20 with axitinib. We think that fits the bill from that perspective. It's really interesting because axitinib has a similar market share to lenvatinib in the frontline, despite the fact that its progression-free survival in its pivotal study, both run against sunitinib, was significantly worse. We think that's because of the patient-friendly aspect of the regimen. In our minds, that's the smart way to run the combination if we're going to run one with the anti-PD-1 and TKI to make something available.
The one other comment I'll make there is we think VEGF obviously has a very important role to play in clear cell RCC. The other thing that we're exploring is combination with PD-1 VEGF bispecifics, and there we have combinations with three partners currently that we're working on. We're partnering with Summit and running a cohort in our ARC-20 trial with ivonescimab. We are also partnering with Bristol Myers, where they're running a cohort in their ROSETTA platform study. Then there's a third pharmaceutical partner that we'll announce who that is in the next several weeks when the trial hits clinicaltrials.gov.
Yeah. Very interesting combinations. Two questions here. First, why did you go with three partners?
Yeah.
Two, what do you hope to achieve when you combine with PD-1 VEGF? What would be the right benchmark? Is it ipilimumab that you're trying to beat?
Yeah. Absolutely. In fact, just finishing my point on the prior piece is just the data from the TKI axitinib combo will be emerging at around a similar time to the data emerging from the bispecific datasets. There's a chance that the bispecifics may address that desire for the VEGF axis involvement. In which case, we might move forward with a pivotal study in the frontline with a bispecific rather than moving the TKI forward. Getting back to answering your prior question around the strategy there.
It will allow us to make a really good decision about what the next potential pivotal study could look like in the frontline at some point next year. Why did we run three partnerships? First of all, I should say that the economics of these clinical collaborations is very favorable to Arcus. We are deploying very little capital across all three of the clinical collaborations. I think it remains to be seen how the profiles of each of the agents will emerge, especially in clear cell RCC. There were a couple of things that were important to us. One was the ability to generate our own dataset, which we will be doing with Summit in ARC-20 with ivonescimab.
But we think it just introduces a lot more long-term optionality in terms of potential partnering, strategic collaboration, et cetera, by having our bases covered with potential agents that could be moving forward.
On casdatifan monotherapy late line, I think you guys mentioned the OS will be the focus there. Sounds like you have long enough follow-up to show the median OS. What would be considered differentiated from belzutifan?
Yeah. So we will have 28 months of median follow-up, TBD as to whether we will have hit a median yet or not at that point. Belzutifan with LITESPARK-005 was 21 months. I think differentiation is probably, as is always the case, in the eye of the beholder. Suffice it to say, we just hope that it is not ambiguous. Clearly, the PFS was not ambiguous, and so we would hope that the OS similarly would not be ambiguous.
Yeah. For me, at least three month delta.
Yeah. I think that's very fair. Yeah.
Okay. You guys sort of talked about 80% of the portfolio spend is going towards casdatifan. It sounds like you guys are going to the phase III frontline trial this year, and sounds like you guys are thinking about the second frontline trial next year.
And then you also have emerging I&I pipeline. So help us understand how you approach capital allocation.
Absolutely. As you can tell, priority one, with a heavy emphasis, is casdatifan, and our development program for casdatifan has been sequenced in a way that is going to essentially allow us to maintain a very similar run rate from a capital perspective for the next couple of years. As we complete enrollment for PEAK-1, we will be starting enrollment for ARC-20.
Those trials' spend profile will work nicely together. In terms of the early-stage immunology portfolio, the nice part about that is really the next couple of years is largely going to be focused on initial proof of concept, which is fairly capital efficient for sure. We think that there is an opportunity for really disproportionate value creation in that early portfolio with small investment. Obviously, when you get to the point where you move from the early proof of concept studies to the larger phase IIb, phase III studies in immunology, that is where a lot more capital needs to be deployed. At that point, we would have gotten to our first results from casdatifan, and then we will be in a position to decide whether or not we would want to move those assets forward on our own, whether we would want to potentially entertain strategic partnerships as well.
Okay, great. Looks like we're out of time. Thanks, Bob and Pia. A very good discussion.
Thank you.
Thanks.
Thanks, Li.